Ichigo REIT October 2012 Fiscal Period
Corporate Presentation
December 18, 2012

Ichigo Real Estate Investment Corporation
Ichigo Real Estate Investment Advisors Co., Ltd.

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

www.ichigo-reit.co.jp/english

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

Creating peace of mind throughhhonestt andd committed
itt d management.
t© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

• Growth Strategy Road Map• October 2012 Financial Results- Increased Dividend- Stable Occupancy- April 2013 Dividend Forecast• Stage I: Lay Foundation for Growth-

Progress in Financing Strategy
Progress in Internal Growth Strategy
Progress in External Growth Strategy
Strengthened REIT Asset Management Company
Ichigo REIT Growth Potential• Stage II of the Growth Strategy- Public Offering to Grow Dividend- Growth Cycle- Strategic Direction

Appendix: Borrowings / Leasing & Portfolio / About Ichigo REIT

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

5

Growth Strategy Road Map

2011/10

Stage I

Stage II

Stage IIILay Foundation for Growth

Full-Scale Growth

Solidify Market Position

2012/4

1st period post merger

2012/10

2nd period post mergerGo
oal

Seek Dividend of ¥1,200+¥1 200+

Action Plan

■ Financial Strategy
・Strengthen lender base・Reduce borrowing costs■ Internal Growth Strategy
・Reduce operating costs
・Enhance profitability of properties■ External Growth Strategy
・Disposition using negative goodwill
・Gather property information for PO
・Replace properties in timely fashion
・Consider indirect property
acquisition, e.g., TK investment

2013/4

3rd period post merger

2014/42013/10

4th period post merger

5th period post merger

2014/10

6th period post merger

PO Targeting Dividend
GrowthFurther Growth of Dividendand Assets■ Financial Strategy
・Strengthen lender base・Strengthen financial base via PO・Obtain credit rating■ Financial Strategy
・Consider non-collateralizedborrowing・Consider bond issuancepmeasures toward further
・Implement
asset growth■ Internal Growth Strategy
・ Enhance profitability of individual
properties■ External Growth Strategy
・Acquire properties via PO・Gather property information for asset
growth and strengthen asset
sourcing■ Internal Growth Strategy
・Continuously enhance profitability ofproperties■ External Growth Strategy
・Further expansion of scale of assets

Growth© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

6

October 2012 Financial Results© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

7

October 2012 Financial Results
Dividend for October 2012: 1,387 yen- One-time loss of net income on the COI Niigata Building asset sale is offset
by negative goodwill- Increased operating income with one-time increase in rent revenue on
tenant terminations results in October 2012 dividend beating forecast( illi yen))(million

Category

Oct 2011 Actual
FCR

Ichigo REIT

Sim ple Sum

Apr 2012
ActualOct 2012
ActualInitial Forecast

Difference

Major Factors for Variation

Operating Revenue

787

3,674

4,461

4,273

4,320

4,266

+54

Increase in Rent Revenue +16 (Rent Comon Service
Fee +15), Other lease busines +39 (Utility Income -4,
Other +43)

Operating Income

402

1,457

1,859

1,534

1,866

1,746

+120

Decrease in Rent Expenses +47(Utility cost +15、Taxes +11、Repair expenses +14)

Ordinary Income

240

591

831

526

663

619

+44

Increase in Consumption Tax adjustment +25、Increase in borrow ing related expenses -105

Net Income

236

568

804

17,089
,

-526

618

-1,145,Decrease by
y the COI Niigatagasset sale -1,189,

7,220 yen
(beforeunit split）

2,777 yen
(beforeunit split)

1,219 yen

1,387 yen

1,260 yen+127 yen

No. of properties

19

52

71

67

67

－

－

－

No. of tenants

19

538

557

520

503

－

－

－

34,027 m 2 141,957 m 2

175,984m 2

162,565 m 2

162,677 m 2

－

－

－

－

5.6%

5.7%

－

－

－

Dividend per Unit

Leasable area
NOI yield

5.4%

4.3%

954 yen(afterunit split)*NOI yield of pre-merger Ichigo REIT is based on original pre-merger acquisition price© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

8

Increased DividendWith Growth Strategy Progress, Increased Dividend for October 2012
- Offset one-time expenses with negative goodwill- +77 yyen contribution from tenant earlyy termination p
penalties

Dividend for October 2012
Increase inrental income+35 mmyen

October 2012
Initial forecast(Dividend reserve)

1,067 mm yen↓
Dividend p
per unit

1,260 yen
Dividend Oct. 2012
(Forecast)

Decrease in
SG&A

Decrease in
non-operating
expenses+6 mm yyen

-7
7 mm yen

One-time expenses offset by
negative goodwill

One-time gains+67 mmyen

Increaseindividend(Dividend reserve)

1,102 mm yen↓
Dividend per unit
(on-going basis)

1,310 yen

October 2012
Actual(Dividend reserve)

1,169 mm yen
CapitalC
it l lloss
due toasset sales↓-1,403 mmyen

Negativegoodwill
1,695 mmyen

Dividend per unit

1,387 yen

Expenses due
to partial
repayment ofloans-291 mmyen© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

Dividend Oct. 2012
(Actual)9Stable Occupancy
92.3% Occupancy as of End of October 2012
- 2.4% decrease versus last period, but occupancy remains high at 94.2% whenexclude the COI Niigata Building sold in November 2012
- Dramatically shrank free-rent tenant incentives, driving higher NOI-

Central Tokyo average: 3.9 months → 3.1 months (-0.8 months vs. April 2012 period)
Other regions average: 5.0 months → 2.0 months (-3.0 months vs. April 2012 period)

Change in Occupancy and Average Rent per Tsubo
100%
Average Rent （O+Z）

98.8%

Average Rent （R）

95.9%

97.3%

Office （O）
Residence （R）

91.8%

90%

Total

97.4%

24,000

98.3%

97.4%
96.3%

98.1%
96.2%

Others （Z）

(yen)

90.5%

89.9%

87.9%

94.7%
92.0%

91.6%

92.3%

93.2%

20,000

90.5%

90.2%

16,00014,30080%

No. of properties

70%

14,10012,10014,00013,90012,00011,90013,90011,90011,700Oct. 2010

Apr. 2011

Oct. 2011

Apr. 2012

Oct. 2012

Office (O)

46

45

45

41

41

Residence (R)

18

18

18

18

18

Others (Z)

8

8

8

8

8

72

71

71

67

67

Total

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

12,0008,000

10April 2013 Dividend Forecast
Dividend Forecast for April 2013: 1,330 yen+20 yen vs. October 2012 on on-going earnings basis(million yen)
Category

Operating Revenue

Oct. 2012
Actual (A)4,320

Apr. 2013
Forecast (B)Major Factors for Variationin Net Income(B)-(A)

4,118

-202

Increase in Rental Income -117,
117
Other -85 (Utilities Income -36, Other Income -32)

Operating Income

1,866

1,955

Decrease in Rental Expenses +85(Decrease in Asset sales +52、Decrease in Utility+88
Expenses +21+21, etcetc.),) Decrease in Loss on Sales +214
+214,
Increase in SG&A -7

Ordinary Income

663

1,069

+405

Net Income

-526

1,069

+1,595

1,387 yen

1,330 yen

-57 yenDividend per Unit

Decrease in Interest Expenses +27, Decrease in
Borrowing Related Expenses +315
Decrease in Extraordinary Loss +1,189(Impairment Loss)+20 yen vs Oct 2012 on an On-Going Basis* The acceleration of Ichigo’s growth strategy is introducing some uncertainty in forward earnings, so for the moment Ichigo REIT isreleasing an earnings forecast for the Fiscal Period ending April 2013 only
only. The earnings forecast for the fiscal period ending October
2013 will be announced as soon as it is available. As appropriate, going forward Ichigo REIT expects to return to issuing two forwardfiscal period earnings forecasts.
© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

11

Stage I: Lay Foundation for Growth© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

12

Lay Foundation for GrowthStage I : Lay Foundation for Growth

Goal

Growth Strategy in Stage I

Progress

Seek
S
k Di
Dividend
id d off¥1,200+

Apr 2012
A
2012: ¥1,219¥1 219 (actual)(l)
Oct 2012: ¥1,387 (actual)■ Financial Strategy
・Strengthen lender base・Reduce borrowing costs

Action P
Plan■ Internal Growth Strategy
・Reduce operating costs
・Enhance profitability of properties(Strengthening leasing and strategic
value-up)
value
up)

■ Financial Strategy
・Diversified lender formation andlengthened repayment dates
・Reduced borrowing costs by 1.34%■ Internal Growth Strategy
・Cut duplicated costs via the merger
・Consolidating and reducing
outsourcing costs
・Improved occupancy(T t l occupancy 91(Total91.6%
6% → 94.2%)
94 2%)

Lay Foundation
for Growth*Excluding COI Niigata Building■ External Growth StrategyDii i usingi negative
i goodwill
d ill
・Disposition
・Gather property information for PO
・Replace properties in timely fashion
・Consider indirect property acquisition,e.g., TK investment■ External Growth Strategy
・Sold 6 portfolio assets
・Acquired M’s SQUARE© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

13

Progress in Financing Strategy (1)Reduced Borrowing Costs via Refinancing and Repayment- JPY 16.7 billion of refinancing in Stage I- 0.38% average reduction in interest rate
Refinanced Loans during Stage I
Draw dow n Date

May 2012

New Loans

Lenders

SMBC & Mizuho Trust Bank
Syndicate Loan (Term Loan 1)

SMBC
Mizuho Trust Bank
Aozora Bank
Shinsei Bank
Resona BankSMBC & Mizuho Trust Bank
Syndicate Loan (Term Loan 2)

Loan Amount (yen)5,497,000,000

5,497,000,000

Refinanced Loans
Tokyo Star Loan (Term Loan 5)
Tokyo Star Loan (Term Loan 6)
Mizuho Trust Loan (Loan backed by Trust Assets) /ORIX Trust Loan

August 2012

Aozora Bank Syndicate Loan

Aozora Bank
Shinsei BankORIX Bank

5,664,000,000

Aozora Bank Loan
※Including loan for asset acquisition

November 2012

Kagaw a Bank Loan

Kagaw a Bank

1,400,000,000

Changes in terms of existing Kagaw a Bank Loan
※Total Loan amount is as of November 30, 2012

Average Interest Rate
2.70%

Total

18,058,000,000

At Merger

2 62%
2.62%

2.62%

SMBC & Mizuho Trust Bank
Syndicate Loan (Term 1 &2)

2.60%
2.50%

0.38% reduction in borrowing cost

2.40%

2.35%

Changes in Terms of
Kagawa Bank Loan

2.26%

2.30%

2.26%

2.20%

2.24%
Aozora Bank
Syndicate Loan

2.10%
2.00%
Nov. 2011

Apr. 2012

May. 2012

Aug. 2012© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

Oct. 2012

Nov. 201214

Progress in Financing Strategy (2)Strengthened Lender Base
- Diversified lender formation- New borrowings from major Japanese banks- Executed a syndicate loan arranged by SMBC and Mizuho Trust
Di t ib ti off L
Distribution
Lendersd(As of the Merger Date on November 1, 2011)
BNY Mellon Trust
Resona Bank 1%
3%

Kagawa Bank
2% ORIX Bank
1%SMBC Mizuho
5%
Trust
Bank
Tokyo Star Bank
5%
5%

Mizuho Trust
Kagawa Bank
(Loan backed by
2%
Trust Assets)Prudential LPS
Mizuho Trust
5%(Loan backed by
Trust Assets)
AIG Edison
ORIX BankLife Insurance
4%

6%

Aozora Bank
7%

Tokyo Star Bank21%

(As of November 30, 2012)

GE JapanCorporation
51%

Mizuho Trust(Loan backed by Trust Assets)Prudential LPS
5%Resona Bank
5%

GE JapanCorporation49%

Gibraltar
7%

Shinsei Bank
8%

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

AozoraBank
8%15

Progress in Internal Growth Strategy (1)•Bottom-Up Strategy-

Differentiate Asset Management with Thorough Bottom-Up
Strategy--

Direct Ichigo leasing site
Published Ichigo’s Property Management Standard

Experimentalp
New Leasingg Approachpp((LayoutyProject)j )-•Monetize idle space in properties: Ichigo & Nokishita.com
Customer satisfaction survey
Tenant satisfaction improvement projects (eg. Bathroom renewal,
Green project)
Property management checks by Ichigo employees

Established Ichigo Leasing Site www.15-15.co.jp--

Ichigo’s Leasing Site

Layout Project

Providing high-design office layout pre-fitted and furnishedDifferentiation by adding extra value for higher rent

Improve Occupancy-

Achieved High Occupancy via Direct Leasing-

Total Occupancy 91.6% at the Time of the Nov 2011 Merger→ 94.2%
94 2% as of October 2012 (excluding COI Niigata Building)© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

16

Progress in Internal Growth Strategy (2)• Strategic Value-Up for Tenant Satisfaction- Taking advantage of Ichigo’s strong developmental & architectural know-how• Ichigo Branding Implementation- Standardize the tenant signage and leasing advertisements© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

17

Progress in Internal Growth Strategy (3)• Published Ichigo’s Property Management
Standard- Hands-on
Hands on property management via abottom-up strategy- Enhance tenant satisfaction via very highlevel standard of managementg- Share Ichigo’s standard with outsourcing
companies to maintain high quality ofservices

Ichigo’s Property Management Standard(from Ichigo’s leasing site)• Consolidated Outsourcing of Property
Management Companies-

Drives higher quality of services
Consolidated from 14 to 8 companies
Deepened partnerships with PM companies
Reduced PM cost c. ¥8 million p.a.

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

18

External Growth Strategy (1)• Progress in Asset Sales- Sold c. JPY 5.8 billion assets (6 properties) post-Nov 2011 merger- Sold older, lower profitability, high-maintenancehigh maintenance assets- Any capital losses offset by negative goodwill gained through the merger- Sold 5 of the 6 assets via Ichigo Group network• Acquired M’s SQUARE, a HighGrade Tokyo Office Property

M’s SQUARE

Location Map- Obtained preferential acquisitionright in March 2012
- Acquired in August 2012
- Used Ichigo Group’s warehousing
capability- Improves overall portfolio quality© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

19

External Growth Strategy (2)Portfolio Improvement Progress
As of November 1, 2011at the Merger

Items

No. ofProperties

Acquisition Price(million yen)

As of October 31, 2012

Total

71

66

Office45

40

Residence

18

18

Other

8

8

Total

107,978,
104,321

Office74,32570,668Residence

20,00620,006

Other

13,647

13,647104,902

100,457

175,984.91,㎡

156,307.91㎡

91.6%

94.2%

Monthly NOI (million yen)

512

485

Average Age (years)

20.5

20.6

Appraisal Price (million yen)
Leasable Area
Occupancy© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

Shrunk portfolio size with asset
sales in order to improve
portfolio quality
Increased occupancy withstrong leasing

Asset sales for portfolio quality
improvement are almost over20

Strengthened REIT Asset Management Company• Merged Ichigo’s J-REIT Asset Manager with Private Real Estate FundManager (July 2012)- Integrate asset management know
know-how
how and sourcing routes and strengthen
human resources- Implement clear rules to avoid conflict of interest between Ichigo REIT and
private equityp
q y RE fund• Accelerate Property Acquisition Using Warehousing Capability Developed
via Ichigo Group Reorganization- Expedite new acquisitions to further develop the portfolio
Reorganization in Ichigo Group (July 2012)
Reorganization
Private Equity RE Fund AM

New Ichigo Real Estate Investment Advisors

Ichigo Real Estate Investment Advisors Co., Ltd.

Merge
J-REIT AM (Ichigo REIT)

Ichigo REIT Management Co., Ltd.

Small-Sized Assets & Ground Leases

Ichigo Estate Co., Ltd.
Merge

Financial Solutions

Ichigo Solutions Co., Ltd.

AM for J-REIT and private equity RE funds
Strengthened sourcing and AM capabilities

New Ichigo Estate
Small-sized assets, ground leases, and warehousing© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

21

Ichigo REIT Growth Potential• Ability to Further Decrease Borrowing Costs- Reduction in borrowing costs possible as financing market improves- Improve profitability with refinancing to proper interest rates on existing loans
Improve Profitability with Proper Interest Rate Level

1.0%

Existing loans withhigh interest rate
Interest rate level undercurrent financing trend• Portfolio Improvable- Post-Nov 2011 merger,
building portfolio with longterm, stable revenue- Replace properties using
negative goodwill to
improve profitability(Profitability)
TargetPortfolioHigh

Maintain
NOI

Development andother unique assets(Value Up Potential)
Small

Large

Assets to be
replaced

Value Up

Low
© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

22

Stage II of the Growth Strategy© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

23

Public Offering to Grow Dividend• Achieved Target Dividend in Stage I
Initial Target ¥1,200 → Actual ¥1,310• Keys for Public Offering to Grow Dividend- Comprehensive refinancing: reduce borrowing costs andimprove borrowing conditions- Strengthen lender base- Build seed asset pipeline

Increase in
AUM & Market Cap■ PO to Grow Dividend(Acquisition / Profit Increase)

Starting Point forStage II
AUM
over ¥100 billion

Tasks
Refinancing
Building Pipeline

・PO to maximize unitholders’value, with due consideration
to NAV and implied portfolio
cap rate

G
Growthth Cycle
C l・Effective use of negative
goodwill at right timing© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

24

Growth Cycle
With Foundation Laid in Stage I, Entering Growth Cycle
Stage II

Stage I

Lay
Foundation
for Growth・Achieved dividend of¥1,310 yen,exceeding the initial
target of ¥1,200 yen
・Use negative
goodwill for financing
and internal andexternal growthstrategies

Grow
Dividends

Enhance
Profitability

Stage III

Raise Unit
Price

Ichigo REIT
G
Growthth Cycle
C l

Solidify Market
Position
LaunchPO

Accelerate
GrowthImprove
Portfolio

Increase
AUM© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

25

Strategic Direction• Value-Up REIT--

Improve infrastructure through effective use of existing housing stock, especially mid- tosmall-size assets lacking
gap
professional real estate owner, which comprisepover 90% of
real estate market
Implement value-up strategies (middle risk with middle-plus return)Hands-on property management to attract and keep quality tenants• “Final Owner” REIT-

Minimize potential loss from aging buildings by managing and improving them on agsustainable basis for the long-term
Focus on a building’s location, timing of any potential sale, and “reusability” via scrap &build

Ichigo REIT AM Timeline

Minimize potential losses frombuilding aging via sustainable AM
Value Up

Value

Reuse

Property
Property

5 -10 years

Extended profit
period© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

Property

Sale

26

Appendix: Borrowings© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

27

November 30, 2012 Loan Details
As of November 30, 2012

Balance(mm yen)Interest Rate

Drawdown Date

Maturity Date

Gibraltar Life Insurance

3 800
3,800

2 481% (fixed)
2.481%March 16
16, 2006

March 16
16, 2013

The Tokyo Star Bank, Limited

2,880

3M JPY TIBOR + 2.50% (variable)

November 30, 2010

May 31, 2013

Resona Bank, Limited

2,000

3M JPY TIBOR + 1.50% (variable)

June 29, 2011

April 30, 2014

GE Japan Corporation

28,460

3M JPY LIBOR + 2.30% (variable)

November 30, 2010

May 30, 2014

Aozora Bank Syndicate Loan
(Aozora Bank, Ltd., Shinsei Bank, Limited, ORIX Bank
Corporation)

5,646

1.60269% (fixed)

August 31, 2012

February 27, 2015

SMBC & Mizuho Trust Bank Syndicate Loan (Term Loan 1)(S mitomo Mits
(Sumitomo
Mitsuii Banking Corporation
Corporation,
Mizuho Trust & Banking Co., Ltd., Aozora Bank, Ltd.,
Shinsei Bank, Limited, Resona Bank, Limited)

5,054

3M JPY TIBOR + 1.10% (variable)

May 9, 2012

April 30, 2015

The Kagawa Bank, Ltd.

1,400

6M JPY TIBOR + 1.10% (variable)

November 30, 2010

November 30, 2015

Mizuho Trust & Banking Co
Co., Ltd
Ltd. (Loan Backed by Trust
Assets) / Prudential LPS

2,898

2.81% (fixed)

November 30, 2010

May 25, 2016

SMBC & Mizuho Trust Bank Syndicate Loan (Term Loan 2)(Sumitomo Mitsui Banking Corporation,g Co.,, Ltd.,, Aozora Bank,, Ltd.,,
Mizuho Trust & Banking
Shinsei Bank, Limited, Resona Bank, Limited)

5,483

1.91575% (fixed)

May 9, 2012

April 30, 2017

Total

57,622

Lender

LTV: 50.0%
50 0% (vs.
(N
Novemberb 30,
30 2012 total
t t l assets)t )© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

28

(Reference) October 31, 2012 Loan Details
As of October 31, 2012

Balance(mm yen)Interest Rate

Drawdown Date

Maturity Date

The Tokyo Star Bank,
Bank Limited

2 895
2,895

3M JPY TIBOR + 2.50%
2 50% (variable)

November 30
30, 2010

November 30
30, 2012

The Kagawa Bank, Ltd.

1,412

3M JPY TIBOR + 2.00% (variable)

November 30, 2010

November 30, 2012

Gibraltar Life Insurance

3,800

2.481% (fixed)

March 16, 2006

March 16, 2013

Resona Bank, Limited

2,000

3M JPY TIBOR + 1.50% (variable)

June 29, 2011

April 30, 2014

GE JapanJ
Corporation
Cti

28 46028,460

3M JPY LIBOR + 2
2.30%
30% ((variable)
i bl )

N
Novemberb 30
30, 2010

M 30
May30, 2014

Aozora Bank Syndicate Loan
(Aozora Bank, Ltd., Shinsei Bank, Limited, ORIX Bank
Corporation)

5,664

1.60269%

August 31, 2012

February 27, 2015

SMBC & Mizuho Trust Bank Syndicate Loan (Term Loan 1)(Sumitomo Mitsui Banking Corporation,
Mizuho Trust & Banking Co., Ltd., Aozora Bank, Ltd.,
Shinsei Bank, Limited, Resona Bank, Limited)

5,054

3M JPY TIBOR + 1.10% (variable)

May 9, 2012

April 30, 2015

MizuhoMih T
Trustt & B
Bankingki CCo., Ltd
Ltd. (L(Loan B
Backedk db
by TTrusttAssets) / Prudential LPS

2,910

2.81% (fixed)

November 30, 2010

May 25, 2016

SMBC & Mizuho Trust Bank Syndicate Loan (Term Loan 2)(Sumitomo Mitsui Banking Corporation,
Mizuho Trust & Banking Co., Ltd., Aozora Bank, Ltd.,
Shinsei Bank, Limited, Resona Bank, Limited)

5,483

1.91575% (fixed)

May 9, 2012

April 30, 2017

Total

57,679Lender

LTV: 50.2%
50 2% (vs.
(vs October 31,
31 2012 total assets)© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

29

Appendix: Leasing & Portfolio© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

30

Leasing Progress
Leased area saw a net decrease due to contract terminations and asset
sales, but new asset acquisitions offset some of that decrease
Leasing Activity
Rent(for entire period)

Change fromprevious rent

2-239 mm yen―

Average Free Rent

15

1,213 m 2

+28 mm yen+13 %Tokyo Metropolitan Area: 3.1 months

Flat

12

486 m 2+12 mm yen―

Downward

40

2+72 mm yyen

No.

Leased Areas

88

10 063 m
10,063

UpwardContract terminations

New contracts

,
m
3,329

-15 %

(-0.8 months vs. Apr. 2012)

Others: 2.0 months((-3.0 months vs. Apr. 2012))* Excluding assets sold during the period

Change in Leased Area
Contract terminations-10,063 m2

New contracts+5,028 m2

Asset sales-1,054 m2

Acquisition+2,345 m2

153,945 m2

End of April 2012
© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

150,200 m2

End of October 201231

Contract Status
Over 90% of Lease Renewals at Existing Rent
Status of Contract Renewals in Oct. 2012 Period

Rent(for entire period)

Change fromprevious rent

No.

Leased Areas

0

0m

2

0 mm yyen

0.00 %

Flat

143

23,247 m2――

Downward

14

8,058 m2

-9 mm yen

-4.90%

Upwardp* Excluding assets sold during the period

Downward(14 / 178)

(No. / mm yen)

Renewedcontracts(157 / 742)

Others(706 / 2,998)

Flat(143 / 564)

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

32

Monthly Rent
Change in Total Monthly Rent is -13 mm Yen
Change in Portfolio-Wide Monthly Rent
Contract
termination
New contracts

Revision-39 mm yen +18 mm yen-1 mm yen

Acquisition+9 mm yen

Change bycontract renewal-1 mm yen
624 mmyen

Change by tenant movements(-0.2%)-21 mm yen( 3 4%)(-3.4%)

611 mmyen

Change during the period-13
13 mm yen(-2.1%)End of April 2012

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

End of October 201233

Tenant Diversification
Broad Diversification of Portfolio Tenants across Small/Mid-Sized Assets
As of October 31, 2012

Tenant Profiles (Office and Others)
OthersWelf are 6%
3%
Real Estate
3%
Education
4%
Finance6%Corporate
Ct
30%
Individual
70%

Service*
26%

Manufacturing
10%
Restaurant,
Hotel
12%

Diversification of Tenants (Residences)(Total number of tenants: 772)

 Age

 Gender
IT
16%

50s
9%

Female43%

Retail14%

Others
4%

20s
32%

40s
16%

Male
57%
30s
40%

(Total number of tenants: 500)
* “Service” includes advertising agencies, consulting companies, accountants,
law firms, HR companies, beauty salons, domestic and foreign government
offices, etc.

* Excluding service apartments (Bureau Takanawadai, B-site Hamamatsucho,
B-site Ginza East) and restaurants.

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

34

Portfolio Diversification
As of October 31, 2012

By UseBy Region

Portfolio Overview
No of Properties
No.

67

Middle: Acquisition Price(bn yen)Total Acquisition Price

106,150 mm yen

Below: % of portfolio

Total Appraisal Value

101,087 mm yen

Leasable Area

162,677 m 2

Occupancy

92.3%

Other
13%
Residence
19%
Sapporo
0.5
1%

Tokyo
Metro
Area
78.4
74%

By Price
Sendai
0.5
1%

0~1
0
1 bn yen
17%
3 bn yen~
34%

Nagoya12.2
11%

Kansai
4.9
4%Office68%

Others8.8
8%

Fukuoka
0.6
1%

2~3 bn yen
11%

By Age30 years~
24%

20~30
years
24%

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

1~2 bn yen
38%

0~10 years
31%

10 20
10~20
years
21%

Average:21.4 years
35Portfolio Description (1)As of October 31, 2012
Use

No.

OfficeProperty

Area

Address

AcquisitionPrice(mm yen)

NRA (m 2)

Occupancy(%)

Appraisal
Oct 2012(mm yen)

Cap rate(%)

O-01

COI Shinbashi Building (Note)Central Tokyo

Shinbashi, Minato-ku, Tokyo

6,110

5,519.98

100.0%

6,030

-

O 02
O-02

COI Nishisando
Ni hi
d B
Building
ildi

C
Central
lT
Tokyo
k

Y
Yoyogi,
i Shib
Shibuya-ku,
k T
Tokyo
k

32 4
3,254

4 6 194,677.19

81 2%
81.2%

2 998
2,998

O-03

MTC Building

Central Tokyo

Shiba, Minato-ku, Tokyo

2,740

4,097.63

100.0%

2,767

5.3

O-04

COI Nanpeidai Building

Central Tokyo

Nanpeidaicho, Shibuya-ku, Tokyo

1,920

1,925.24

87.2%

1,710

4.7

O-05

Joware Hanzomon

Central Tokyo

Hayabusacho, Chiyoda-ku, Tokyo

1,550

2,080.37

89.6%

1,480

5.1

O-06

COI Hijirizaka Building

Central Tokyo

Mita, Minato-ku, Tokyo

1,200

1,947.90

100.0%

1,220

5.4

O-07

COI Shibuya Kamiyamacho Building

Central Tokyo

Kamiyamacho, Shibuya-ku, Tokyo

1,505

1,321.54

100.0%

1,520

4.9

O-08

COI Akasaka 5 Chome Building

Central Tokyo

Akasaka, Minato-ku, Tokyo

735

687.78

87.6%

727

4.8

O-09

COI Shibazonobashi Building

Central Tokyo

Shiba, Minato-ku, Tokyo

1,100

1,602.29

100.0%

1,110

5.2

O-10

COI Ebisu Nishi Building

Central Tokyo

Ebisu-nishi, Shibuya-ku, Tokyo

1,917

1,484.39

100.0%

1,792

5.1

O-11

COI Ginza 612

Central Tokyo

Ginza, Chuo-ku, Tokyo

1,773

1,395.58

100.0%

1,794

4.8

O-12

COI Uchikanda Building

Central Tokyo

Uchikanda, Chiyoda-ku, Tokyo

1,140

1,379.33

100.0%

1,100

5.2

O-13

COI Kudan-Minami Building

Central Tokyo

Kudan-Minami, Chiyoda-ku, Tokyo

387

490.91100.0%

393

5.0

O-14

COI Yotsuya 4 Chome Building

Central Tokyo

Yotsuya, Shinjuku-ku, Tokyo

550

780.64100.0%

551

5.1

O-15

COI Akasaka Tameike Building

Central Tokyo

Akasaka, Minato-ku, Tokyo

580

494.14

65.1%

559

4.6

O-16

DSM Jimbocho Building

Central Tokyo

Kanda Jinbocho, Chiyoda-ku, Tokyo

1,820

1,889.54

92.6%

1,830

5.0

O-17

DSM Nihonbashi Kakigaracho Building

Central Tokyo

Nihonbashi Kakigaracho, Chuo-ku, Tokyo

1,150

2,379.80

100.0%

1,150

5.2

O-18

COI Kudan 2 Chome Building

Central Tokyo

Kudan Minami, Chiyoda-ku, Tokyo

763

1,288.31

100.0%

786

5.1

O-19

COI Kudan 3 Chome Building

Central Tokyo

Kudan Minami, Chiyoda-ku, Tokyo

844

1,302.43

60.4%

803

5.2

O-20

COI Gotanda Building

Central Tokyo

Higashi-Gotanda, Shinagawa-ku, Tokyo

5,060

5,346.76

100.0%

5,060

5.7

O-21

Benex S-2

y Metro AreaTokyo

Shinyokohama, Kohoku-ku, Yokohama City, Kanagaw a

1,816
,

4,084.18
,

94.4%
%

1,698
,

5.9

O-22

COI Minami-Ikebukuro Building

Tokyo Metro Area

Minami-Ikebukuro, Toshima-ku, Tokyo

1,460

1,490.31

86.0%

1,410

5.2

5.3
3

(Note ) Cap rate of COI Shinbashi Building using the adjusted inwood method, assuming future redevelopment of the asset, is 4.9%

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

36

Portfolio Description (2)As of October 31, 2012
Use

No.

OfficeProperty

Area

Address

AcquisitionPrice(mm yen)

NRA (m 2)

Occupancy(%)

Appraisal
Oct 2012(mm yen)

Cap rate(%)

O-23

Technos Nakano Building

Tokyo Metro Area

Arai, Nakano-ku, Tokyo

764

1,250.85

100.0%

785

5.8

O-24

COI Eitai Building

Tokyo Metro Area

Eidai, Koto-ku, Tokyo

1,490

2,608.05

94.8%

1,290

5.9

O-25

COI Yokosuka Bayside Building

Tokyo Metro Area

Wakamatsu-cho, Yokosuka City, Kanagawa

971

2,186.60

86.8%

908

6.5

O-26

Chitose Building

Tokyo Metro Area

Ohashi, Meguro-ku, Tokyo

2,030

2,385.69

100.0%

1,930

5.5

O-27

Route Ikebukuro Building

Tokyo Metro Area

Ikebukuro, Toshima-ku, Tokyo

639

1,261.91

100.0%

654

5.5

O-28

Nishi-Gotanda AccessCentral TokyoyNishigotanda,g, Shinagawa-ku,g, Tokyoy765

1,311.21
,

89.2%

764

5.4

O-29

TK Kichijoji Building

Tokyo Metro Area

Kichijoji Honcho, Musashino-shi, Tokyo

2,160

4,183.65

88.5%

2,160

5.7

O-30

Ibaraki Kowa Building

Other Regional Cities Eidaicho, Ibaraki City, Osaka

604

2,186.41

80.4%

633

7.1

O-33

COI Mei-Eki Building

Four Major Cities

Meieki, Nakamura-ku, Nagoya City, Aichi

837

2,063.52

100.0%

850

6.0

O-34

COI Nagoya Plaza Building

Four Major Cities

Sakae, Naka-ku, Nagoya City, Aichi

4,705

3,928.12

100.0%

4,783

5.4

O-35

COI Sendai Chuo Building

Other Regional Cities Chuo, Aoba-ku, Sendai City, Miyagi

510

2,378.07

93.3%

437

6.1

O-37

CRD Marunouchi

Four Major Cities

6,710

8,009.11

93.9%

6,570

5.4

O-38

Toyamaeki Nishi Building

Other Regional Cities Jinzuhonmachi, Toyama City, Toyama

1,650

8,601.71

96.0%

1,690

6.9

O-39

Daihyaku Mirai-Shinkin Building

Other Regional Cities Niagemachi, Oita City, Oita

1,100

3,247.08

93.5%

1,100

6.8

O-40

Kearneyy Place Sagag

Other Regionalg
Cities Ekimae-Chuo,, Sagag City,y, Sagag659

2,786.43
,

97.2%

668

7.0

O-42

COI Takamatsu Building

Other Regional Cities Kotobukicho, Takamatsu City, Kagawa

3,010

6,329.33

90.7%

3,010

7.1

O-44

Akita Sanno 21 Building

Other Regional Cities Sanno, Akita City, Akita

560

3,497.88

57.4%

535

8.1

O-45

COI Niigata Building (Note)

Other Regional Cities Higashiodori, Chuo-ku, Niigata City, Niigata

1,830

6,368.60

46.9%

630

O-46

M's SQUARE

Central Tokyo

2,130

2,344.96

100.0%

2,270

72,498

114,595.42

Marunouchi, Naka-ku, Nagoya City, Aichi

Kandanishikicho, Chiyoda-ku, Tokyo
Subtotal - Office

4.7

70,155(Note) Ichigo REIT sold COI Niigata Building on November 15, 2012

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

37

Portfolio Description (3)As of October 31, 2012
Use

No.

Residence

Property

Area

Address

AcquisitionPrice(mm yen)

NRA (m 2)

Occupancy(%)

Appraisal
Oct 2012(mm yen)

Cap rate(%)

R-01

ForeCity Roppongi

Central Tokyo

Roppongi, Minato-ku, Tokyo

1,730

1,663.87

95.1%

1,420

5.0

R-02

ForeCity Azabujuban

Central Tokyo

Mita, Minato-ku, Tokyo

1,140

1,111.20

89.6%

1,100

4.9

R-03

ForeCity Azabujuban No.2

Central Tokyo

Mita, Minato-ku, Tokyo

1,250

1,177.20

100.0%

1,160

4.9

R-04

Bureau Takanawadai

Central Tokyo

Shirokanedai, Minato-ku, Tokyo

1,360

1,677.88

100.0%

988

5.0

R-05

ForeCity Shirokanedai

Central Tokyo

Shirokanedai, Minato-ku, Tokyo

824

927.90

90.0%

725

5.0

R-06

B-Site Hamamatsucho

Central Tokyo

Hamamatsucho, Minato-ku, Tokyo

701

821.84100.0%

530

5.1

R-07

ForeCity Akihabara

Central Tokyo

Kanda Sakumacho, Chiyoda-ku, Tokyo

2,520

3,452.29

100.0%

2,050

5.1

R-08

Sweet One Court

Central Tokyo

Irifune, Chuo-ku, Tokyo

786

1,030.54

93.8%

669

5.1

R-09

B-site Ginza East

Central Tokyo

Shintomi, Chuo-ku, Tokyo

946

1,332.87

100.0%

723

5.1

R-10

ForeCity Sasazuka

Central Tokyo

Sasazuka, Shibuya-ku, Tokyo

1,050

1,452.61

100.0%

896

5.1

R-11
R
11

Gran Presso Kawadacho

Central Tokyo

Kawadacho Shinjuku-ku
Kawadacho,
Shinjuku ku, Tokyo

592

667 16667.16

90 8%
90.8%

501

51
5.1

R-12

ForeCity Sakurashinmachi

Tokyo Metro Area

Sakurashinmachi, Setagaya-ku, Tokyo932

1,182.96

88.5%

757

5.1

R-13

ForeCity Shinkamada

Tokyo Metro Area

Shinkamada, Ota-ku, Tokyo

1,040

1,756.33

93.7%

947

5.4

R-14

ForeCity Nakaochiai

Central Tokyo

Nakaochiai, Shinjuku-ku, Tokyo

435

599.30100.0%

361

5.1

R-15

ForeCity Tomigaya

Central Tokyo

Tomigaya, Shibuya-ku, Tokyo

1,341

2,105.94

81.3%

1,570

5.0

R 16
R-16

F Cit R
ForeCity
RyogokukT k MetroTokyo
M t AreaA

Mid i S
Midori,
Sumida-ku,
id k T
Tokyo
k

1 080
1,080

1 572 39
1,572.39

100 0%
100.0%

1 040
1,040

52
5.2

R-17

ForeCity Toyosu

Tokyo Metro Area

Shinonome, Koto-ku, Tokyo

1,349

3,058.24

100.0%

1,630

5.3

R-18

ForeCity Nishihonmachi

Four Major Cities

Nishihonmachi, Nishi-ku, Osaka City, Osaka

927

2,675.88

100.0%

984

5.7

Subtotal - Residence

20,00628,266.40© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

18,051

38

Portfolio Description (4)As of October 31, 2012
Use

No.

Other

Property

Area

AcquisitionPrice(mm yen)Address

NRA (m 2)

Occupancy(%)

Appraisal
Oct 2012(mm yen)

Cap rate(%)

Z-01

Falcon Shinsaibashi Building

Four Major Cities

Higashi-Shinsaibashi, Chuo-ku, Osaka City, Osaka

3,410

5,760.79

100.0%

2,730

5.4

Z-02

Fiesta Shibuya

Central Tokyo

Udagawacho, Shibuya-ku, Tokyo

1,970

1,220.02

96.2%

1,970

4.9

Z-03

Burc Omori

Tokyo Metro Area

Omorikita, Ota-ku, Tokyo

3,218

5,343.56

97.1%

3,088

6.2

Z-04

Pagoda Asakusa

Tokyo Metro Area

Kaminarimon, Taito-ku, Tokyo

1,640

2,091.27

88.4%

1,680

5.5

Z-05

Regalo Building

Tokyo Metro Area

Haramachida, Machida City, Tokyo

1,310

2,183.65

100.0%

1,330

5.9

Z 06
Z-06

Lespoir 296

Tokyo Metro Area

Minami Saiw ai
Minami-Saiw
ai, Nishi
Nishi-ku,
ku Yokohama City
City, Kanagaw a903

1 264 26
1,264.26

94 8%
94.8%

903

56
5.6

Z-07

El Centro Sapporo

Four Major Cities

Minami 2 jo Nishi, Chuo-ku, Sapporo City, Hokkaido

558

1,185.53

100.0%

558

6.1

Z-08

Daimyo Balcony

Four Major Cities

Daimyo, Chuo-ku, Fukuoka City, Fukuoka

638

765.61100.0%

622

6.5

Subtotal - Other

13,647

19,814.69

12,881

Total

106,150,

162,676.51,

101,087,© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

39

Appendix: About Ichigo REIT

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

40

Unitholder Composition
A off OctoberAs
O t b 31,
31 2012

Number of Units by Unitholder Type

Major Unitholders
Name

Units

Share

Domestic
Individuals& Others
105,610

1

Ichigo Trust Pte. Ltd.

404,486

48%

2

FAL HOLDINGS PTE. LTD.

54,803

7%

3

J
Japan
TrusteeT t Service
S i Bank,
B k TrustT t AccountAt

48 683
48,683

6%

4

Trust & Custody Service Bank, Ltd., Securities Investment
Trust Account37,233

4%

5

The Nomura Trust and Banking Co., Ltd.

31,310

4%

6

The Master Trust Bank of Japan, Trust Account28,3973%

7

GOLDMAN SACHS INTERNATIONAL

27,1293%

8

JP MORGAN CHASE BANK 380 180

13,9022%

Financial
Institutions
30

Domestic
Corporations
106

9

CBNY-CHARLES SCHWAB FBO CUSTOMER

7,065

1%

10

THE CHASE MANHATTAN BANK, N. A. LONDON SECS
LENDI NG OMNIBUS ACCOUNT

4,554

1%

Total

657,562

78%

Financial
Institutions
156,479

Foreigng
Corporation &Individuals
566,930

Domestic
Corporations
13,804

Number of Unitholders by Type© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

Foreign
Corporation &Individuals
86

Domestic
Individuals& Others
8,167

41

Overview of Ichigo REIT
As of October 31, 2012
Name

Ichigo Real Estate Investment Corporation (Ichigo REIT)

Securities Code8975

Address

1-1-1 Uchisaiwaicho Chiyoda-ku, Tokyo

Executive Director

Yoshihiro Takatsuka

Portfolio

67 properties

Portfolio Value

106,150 million yen （acquisition price basis）

Fiscal Periods

November 1 – April 30 and May 1 – October 31

Asset Management Company
Name

Ichigo Real Estate Investment Advisors Co., Ltd.

President & Representative
Statutory Executive Officer

Wataru Orii

© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

42

Disclaimer
These materials are for informational purposes only, and do not constitute or form a part of, and should not be construed as, anoffer to sell or a solicitation of an offer to buy any securities of Ichigo Real Estate Investment Corporation (Ichigo REIT). You
should consult with a representative of a securities firm if you intend to invest in any securities of Ichigo REIT.
These materials may contain forward-looking statements regarding the intent, belief or current expectations of management ofI hi REIT with
Ichigoith respectt to
t financial
fi
i l condition
diti andd ffuturetresults
lt off operations.
ti
These
Th
statementst tt are basedbd on certaint i
assumptions founded on currently available information. Accordingly, such statements are subjects to risks, uncertainties andassumptions and there is no assurance as to actual financial conditions or results of operations. Actual results may vary fromthose indicated in the forward-looking statements. Accordingly, please refrain from solely relying on these statements.
y the managementgof Ichigo
g REIT and Ichigo
g Real Estate Investment Advisors Co.,, Ltd.
These materials have been created by(IRE) with the belief that the information contained is accurate. However, there is no assurance given as to the accuracy,
certainty, validity or fairness of any such information.
Please note that the content of these materials is subject to revision or retraction without prior notice.
No copying or reproduction of these materials or part of these materials is allowed without obtaining prior consent from Ichigo
REIT and IRE.

Contact:

Ichigo REIT IR Desk
TEL：03-3502-4891
FAX：03-3502-4894
IR REIT@ichigo-holdings
IR_REIT@ichigo
holdings.co.jp
co jp
www.ichigo-reit.co.jp/english
Ichigo Group is Japan’s first zero-carbon listed real estate company. We aretaking responsibility for the carbon emissions we create
create, such as via thispresentation material, by taking measures to create offsets to our carbon
emissions and working with organizations to invest in low-carbon technologies.
© 2012 Ichigo Real Estate Investment Advisors Co., Ltd. Ichigo Real Estate Investment Corporation All rights reserved.

43